Tribunal to review national wagering tax in Tabcorp-Tatts merger

The Australian Competition Tribunal has revealed it will look into whether a national wagering tax will hinder the bookmaker industry.

The Tribunal is in the midst of its 14-day hearing over the benefits and drawbacks of a merger between Australia’s two gambling giants, Tatts and Tabcorp.

A negative impact which the Tribunal said it will explore in depth is a national wagering tax which will reportedly make corporate bookmakers even less competitive against the merged entity.

The Tribunal wants further clarification on whether the tax will be implemented and its impacts in order to determine whether Tabcorp and Tatts should merge.

Sportsbet’s CEO, Cormac Barry, gave evidence last week where the issue of the national wagering tax was first addressed.

The tax which mirrors the point of consumption (POC) tax being implemented in South Australia. It is a 15 percent tax on the net wagering revenue of all betting companies which earn more than $150,000 a year and will take effect on July 1 in SA.

The SA tax is the first time an Australian jurisdiction will tax betting companies based on where bets are places as opposed to where betting companies are located – online bookies in Australia are mostly based in NT where tax rates are low.

Barry slammed the suggestion of a nationwide tax stating it would put his company out of business since Sportsbet would be billed around $90 million.

“That would render our business loss-making, and every other corporate bookmaker loss making,” he said.

Barry said he believes the tax will expand from SA to the whole of Australia after it was suggested by Federal Treasurer Scott Morrison earlier this year.

Evidence which may have prompted the Tribunal to look into the issue further was the revelation Tabcorp and Tatts were among the supporters lobbying the SA government to introduce the POC tax.

Barry said he believes the tax would not have been implemented without the push from the two gambling companies.

He also provided other instances when Tabcorp and Tatts had been successful in pushing the government to do something in their favour.

William Hill has also come out against a nationwide POC tax stating it would impact corporate bookmakers significantly due to high costs in a tough market.

“This will no doubt force some operators to review their operators in this market,” a William Hill spokesman told The Australian.

“If a national point-of-consumption tax was implemented that discriminates between state TABs and corporate bookmakers, we hold concerns that consumers will be forced to pay increasing prices for wagering services, as there would be no effective competition.”

Tabcorp’s CEO David Attenborough has suggested Tabcorp and Tatts are at a disadvantage and believes the nationwide tax would create a level playing field.

Many critics have been quick to suggest Tabcorp expects to avoid paying the wagering tax, while industry experts have revealed corporate bookmakers will need to raise market prices by 25 percent in order to alleviate the POC tax impacts.

Reports the Tribunal will look into the wagering tax has come after it was revealed punters could be charged more on weekends by the entity if the deal goes through.

This is combined with the revelation heard by the Tribunal that the merger could see increased prices on tote products which would in turn cost punters even more.